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Stock Market Trend Correction

Stock-Markets / Stock Markets 2010 Jan 31, 2010 - 03:02 AM GMT

By: Peter_Navarro

Stock-Markets

The U.S. markets are in a major correction. If you see any bubblehead portfolio manager on TV telling you this is a great buying opportunity, know that this man/woman is merely a gambler rather than an intelligent speculator. For the foreseeable future, the market is a roulette wheel. Until the dust clears – that is, until market participants figure out the direction of the economy -- this is a good time to be in cash (and non-cyclicals like biotech).


I note with some small degree of vindication that the S&P 500 finished last week at the same level as it was when I called a market top in October, 2009. Perhaps all I really missed was a needle peak that has now evaporated faster than President Obama’s high public opinion rating.

As for why the market has turned bearish, Obama has certainly been doing his part. This last week he could have truly ushered in some real change on his economic team. Imagine him announcing that he was replacing his easy money, ultra-Keynesian, babes in the woods triad of Summers-Geithner-Bernanke with the Dream Team of John Taylor at the Federal Reserve, Paul Volcker at Treasury, and Martin Feldstein as top White House economic advisor. That would have truly turned this country around in one single day. (Note, by the way, that I didn’t even mention Christina Romer and Jared Bernstein. These two White House accoutrement are truly Lilliputians at a time when we need Big Bold Thinkers.)

That said, the economic headwinds we face transcend anyone at the helm. Yes, we had a big GDP number. But few believe it won’t be revised downward, and even if it is big, it does bring closer the day of reckoning when the Fed must confront its bloated balance sheet and the White House must confront its ballooning deficits.

Sure, the markets could take off again next week despite this gloom. But the bigger point here for traders and investors is that the bullish trend has been broken and the days of making easy money like March 2009 to June 2009 have been replaced by more cautious times. Stay tuned.

Professor Navarro’s articles have appeared in a wide range of publications, from Business Week, the Los Angeles Times, New York Times and Wall Street Journal to the Harvard Business Review, the MIT Sloan Management Review, and the Journal of Business. His free weekly newsletter is published at www.PeterNavarro.com.

© 2010 Copyright Peter Navarro - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

Gold Baker
31 Jan 10, 23:47
posts

I love to read posts that are very interesting especially those topics that are about financial matters, business and stock market conditions. It is good to read those posts for they broaden our knowledge about different issue concerning the business world. Thanks a lot.


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